JPMorgan Chase CEO Jamie Dimon Slams Central Banks for ‘Dead Wrong’ Forecasts

JPMorgan Chase & Co. CEO Jamie Dimon speaks during the Business Roundtable CEO Innovation Summit in Washington on Dec. 6, 2018. Jim Waton/AFP via Getty Images

CEO of JPMorgan Chase, Jamie Dimon, criticized central banks like the Federal Reserves for being “dead wrong” in their financial forecasts.

Mr. Dimon made his comments while speaking at the Oct. 24 Future Investment Initiative summit, as he warned of multiple challenges facing the global economy.

“Prepare for possibilities and probabilities, not calling one course of action since I’ve never seen anyone call it,” he told the audience during the summit in Saudi Arabia.

“I want to point out the central banks 18 months ago were 100 percent dead wrong,” he said. “I would be quite cautious about what might happen next year.”

Mr. Dimon’s remarks were referred to March 2022, when the Fed started its rate hikes to combat high inflation. Since then, the Fed has raised the benchmark federal funds rate 11 times to between 5.25 percent and 5.5 percent, the highest level in 22 years.

The Fed projected that the rate would increase to 2.8 percent by the end of 2023, while it is now at 5.25 percent to 5.5 percent.

Regarding the inflation forecast, Fed officials in 2021 insisted that inflation would be transitory, but that has not been the case, as inflation has kept surging. The Fed’s projection of 2.6 percent inflation for 2023 is significantly below the current level of 3.7 percent.

Debt Levels

Mr. Dimon also sounded the alarm about governments’ high debt levels, expressing doubts that governments and central banks worldwide could address the current economic downturn with persistent inflation and weakening growth.

“Fiscal spending is more than it’s ever been in peacetime with the highest debt levels we ever had by governments, and there’s this omnipotent feeling that central banks and governments can manage through all this stuff,” he said.

Mr. Dimon noted that the current situation is the same as in the 1970s, with high spending and waste.

While Wall Street always keeps a close eye on the chance of rate hikes, Mr. Dimon downplayed whether the Fed increased the rates by a quarter point or not, saying, “I don’t think it makes a piece of difference whether rates go up 25 basis points or more.”

But he warned investors should be prepared for possible rate hikes, “Whether the whole curve goes up 100 basis points, be prepared for it. I don’t know if it’s going to happen.”

CME FedWatch Tool shows that markets expect a 97 percent probability of no rate change at the Fed’s November meeting and a 29 percent chance of a quarter-point increase in December’s meeting.

‘Most Dangerous Time’ in Decades

Recently, Mr. Dimon has repeatedly warned about high inflation, geopolitical risks, and significantly high government debt levels as major threats to the U.S. economy.

About two weeks ago, while reporting JPMorgan’s third-quarter results, Mr. Dimon sounded the alarm that U.S. consumers are running down their excess cash buffers and that inflation could stay stuck in high gear due in part to high government spending while issuing an ominous warning that the “most dangerous time” that the world has seen in decades has arrived.

While warning of clouds on the horizon of consumer spending, “extremely” high government debt levels, and the largest peacetime fiscal deficits in U.S. history, Mr. Dimon said he sees a growing risk that inflation stays high and that the Fed will raise interest rates even higher.

He also mentioned the disruptive impact of the war in Ukraine and the recent terror attacks in Israel, warning of “far-reaching impacts on energy and food markets, global trade, and geopolitical relationships.”

“This may be the most dangerous time the world has seen in decades,” he cautioned.

Last month, at an industry conference, Mr. Dimon said that Americans who assume that the U.S. economy will continue to boom for years on the back of consumer strength are making “a huge mistake.”

He again warned about the high level of government spending.

“We’ve been spending money like drunken sailors around the world. This war in Ukraine is still going on. Those are really big buts. To say the consumer is strong today, meaning you got to have a booming environment for years, is a huge mistake,” Mr. Dimon said.